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Game Changing Opportunity for RIL?

  • In 2002 when the Mukesh Ambani-led Reliance Infocomm entered the telecom sector, he took the market by storm. He revolutionized the country's telecom sector by introducing super-cheap call rates which compelled other players to follow suit.What followed is history. Reliance took a strong lead against the market leader, Bharti Airtel Ltd. (Mumbai: BHARTIARTL), within a year and emerged as a leading telecom player in the market.This dream-run, however, was cut short by a family dispute that saw him exiting the telecom business. A change in family equations enabled him to enter the telecom industry again in 2010 when he bought Infotel, the winner of the pan-India Broadband Wireless Access (BWA) spectrum.
  • Present circumstances have presented Mukesh Ambani with another excellent opportunity to get into his favorite sector all over again. So far, the missing link in Mukesh Ambani's armor is voice. Offering just data capability through the BWA spectrum might not enable him to get a strong grip on the market again.
  • With the government preparing for the auction of 122 2G licenses, Ambani gets a new opportunity to own the 2G spectrum. This could be his second inning in telecom to offer a full suite of services. (See IndiaWatch: RIL Preps BWA Launch, RIL's Tablet Trump Card and Rumor: RIL Strikes LTE Rollout Deal.)
  • This can give sleepless nights to his arch rival, Sunil Bharti Mittal. Bharti owns the BWA spectrum only in four circles, and thanks to the 3G-roaming mess, the company will not be able to offer pan-India LTE-TDD services. The company was also believed to be in talks with Qualcomm Inc. (Nasdaq: QCOM) to purchase its spectrum in four circles. Qualcomm, however, has not been able to procure its ISP license which further puts Bharti's plan in danger.
  • The key question that arises now is - Will Mukesh Ambani's new inning, if it happens, shake the telecom market like it did years ago? Currently, RIL is the only player to have the pan-India BWA spectrum, and if one adds voice to its portfolio, it certainly holds the potential to threaten players like Bharti Airtel.Whichever way the wind blows, it is certain that round-two of the match between Ambani and Mittal is going to be enthralling.

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